Businesses occupying non-domestic premises pay business rates. The amount of business rates payable is calculated using the rateable value and the multiplier, set by the government. Different multipliers are used for England, Wales, Scotland and Northern Ireland.
If you change the nature of your business or make changes to your premises – extending them and increasing their rental value – this may affect the rateable value. This in turn may affect the amount of business rates you should pay. You should inform the authorities if you make a change to ensure you are paying the correct amount.
This guide explains which business premises are liable to business rates and what kinds of changes can affect their rateable value. It explains what to do if you are altering or moving your business premises and where to find further information and advice.
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Are my premises liable to business rates?
Most premises used for business are subject to business rates. This includes commercial properties such as shops and factories. There are a few exceptions, including:
- farm buildings and land
- fish farms
- places of worship and church halls
- buildings used for the training or welfare of disabled people
You may be able to make minor business use of your home without paying business rates. But if you use part of your home exclusively for business (eg a workshop), you may be liable for business rates on it.
Read FAQs on working from home on the Valuation Office Agency (VOA) website – Opens in a new window.
Premises that are subject to business rates are given a rateable value. Rateable values are reviewed every five years. The last revaluation took place on 1 April 2010. The rateable value is based on the likely annual rent for the premises if they had been let on the open market from 1 April 2008.
Find information on property valuation on the VOA website – Opens in a new window.
The rates you are charged in England and Wales are calculated using the rateable value and the multiplier, which is set by the government.
Different multipliers are used for England, Wales, Scotland and Northern Ireland.
See our guide: business rates – an overview.
Read about business rates in Scotland on the Scottish Government website – Opens in a new window.
Changing your existing premises
The rateable value of business premises is based on their open market rental value on a set date. Changing your premises can affect the rental value and so affect the rateable value. For example, the rateable value might increase if you build an extension, install air conditioning or generally upgrade the premises.
New regulations came into force in April 2010 which created ‘permitted development rights’. Some premises alterations and extensions can now be undertaken without planning permission providing they meet certain conditions. You should check whether you need planning permission and building control approval before making changes to your premises. See our guides: an overview of the planning system and building regulations – an overview.
If you make any changes that might affect the rateable value of your premises, you should inform the Valuation Office Agency (VOA), otherwise you might later face a backdated increase in your rates bill.
You can get advice from the VOA on how your rateable value might be affected before making any changes. Read about the possible impact of changing your premises on the VOA website – Opens in a new window. For specific advice, you can contact the VOA Helpline on Tel 03000 501 501.
If the rateable value of your premises is re-assessed, the valuation office will send you a summary of your revised valuation. This shows the new rateable value and the basis on which it has been calculated. Find the current rateable value of a property and view the summary valuation on the VOA website – Opens in a new window.
You should check your summary valuation to ensure the rateable value is correct. If you wish to, you can employ a rating agent to act on your behalf and handle any queries about your rateable value. See the page on professional rating bodies in our guide: business rates – an overview.
Different systems apply in England, Wales, Scotland and Northern Ireland.
Moving to new or additional premises
If you are planning to buy or rent new premises, you may want to know how much you are likely to pay in business rates before you move. The first step is to find out what the rateable value of the property is. Find the rateable value of a property on the Valuation Office Agency (VOA) website – Opens in a new window.
If the premises are newly built or have not been completed, the rateable value may not have been set yet. You can ask for an estimate by giving details to the local valuation office. You need to include the address, details of how the premises will be used (eg as a shop) and a plan including layout and measurements. If you will be renting premises, it helps to provide details of the rent you have agreed. Find your local valuation office on the VOA website Contact the VOA Helpline on Tel 03000 501 501.
The business rates you will pay are calculated using the rateable value and the current multiplier. Different multipliers are used for England, Wales, Scotland and Northern Ireland.
Read about business rates in Scotland on the Scottish Government website – Opens in a new window.
When you move, you become liable for the business rates on the new premises. You should contact the local authority so that they can charge you the correct amount. You should also tell the local authority about any premises you are leaving so that they can stop charging you for them.
Changing or diversifying your business
Changing what you do or diversifying can affect the rateable value of your premises. For example, if you start using part of your premises as a shop – instead of as a warehouse – the rental value might increase. The rateable value changes to take this into account.
You may need planning permission to change how you use your premises. The uses of many business premises are grouped into ‘classes’. For example, shops are classified as ‘A1’. You do not need planning permission to change from one A1 use to another A1 use. However, you may require planning permission if the change of use would move your premises into another class. See our guide: an overview of the planning system.
If you make any changes to your premises that might affect its rateable value, you should inform the Valuation Office Agency (VOA), otherwise you might later face a backdated increase in your rates bill.
You can get advice from the VOA on how your rateable value might be affected before making any changes. Find your local valuation office on the VOA website Contact the VOA Helpline on Tel 03000 501 501.
If the rateable value of your premises is re-assessed, the valuation office will send you a summary of your revised valuation. This shows the new rateable value and the basis on which it has been calculated. Find the current rateable value of a property and view the summary valuation on the VOA website – Opens in a new window.
You should check your summary valuation to ensure the rateable value is correct.
If you choose to, you can employ a rating agent to act on your behalf, and handle any queries about your rateable value.
To find more information on checking your rateable value and employing a rating agent see our guide: business rates – an overview.
Different systems apply in England, Wales, Scotland and Northern Ireland.
Read about business rates in Scotland on the Scottish Government website – Opens in a new window.
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Every effort has been made by the author(s) to ensure this article’s accuracy but it does not constitute legal advice tailored to your circumstances. If you act on it, you acknowledge that you do so at your own risk. We cannot assume responsibility and do not accept liability for any damage or loss which may arise as a result of your reliance upon it.
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